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MONTREAL — Multiple fields of the construction industry in Montreal and surrounding regions were controlled by a small group of contractors who took turns “winning” bids, and paid a percentage on the value of every public contract to the Mafia, the Charbonneau Commission heard Thursday.

The cash to pay the Mafia was raised through false billing submitted to companies, both real and fake. Payments were expected regularly while work was being done.

And any contractor who tried to break into the system quickly learned that the Montreal market was “hermetically sealed,” and that it was best to go elsewhere.

For the first time, on Thursday, the inquiry investigating corruption in Quebec’s construction industry heard from one of its former big players. Lino Zambito, the former president and co-owner of construction firm Infrabec, took the stand to detail how he broke into the Montreal market nearly 10 years ago and became part of a cartel of roughly 10 to 12 businesses that controlled the market on fixing water pipes and sewage pipes on the island of Montreal. When he got into the business in 1998, the system of controlling the construction business was already well established, he said. Other sectors of the construction industry, like road paving and sidewalks, operated in the same way, Zambito said, but he only knew intimate details of his own sector.

Backroom dealings

“On most contracts for public tenders in Montreal, there was a lot of backroom dealing that went on,” Zambito testified. “There were contractors that were assigned to Montreal — that was their territory.”

His testimony comes on the heels of two inflammatory days of hearings during which several owners of Montreal-area construction firms were seen consorting with the heads of the Rizzuto organization, Montreal’s leading crime family, on videotapes recorded secretly between 2001 and 2006 by the RCMP. Often, company presidents were seen giving money to mob leaders in the backroom of the Consenza Café, the unofficial headquarters of the organization.

Lino Zambito was one of them, seen handing wads of cash to middleman Nicola Milioto during a Consenza Café Christmas party in 2005 attended by several members of the construction industry and four of the heads of the Rizzuto clan. Zambito was arrested in 2011 on charges of collusion. His company, Infrabec, went bankrupt in 2011. He said he is now a restaurateur.

Aspiring lawyer went into family business

On Thursday, he told commissioners he first studied to be a lawyer, but decided to enter the family business in 1998, run by his father, Giuseppe Zambito, who grew up in the same small town in Sicily as Nicolo Rizzuto, the former head of the crime organization. At its peak, in 2007-2008, Infrabec was earning between $25 million and $35 million a year and employing 130 people, specializing in work on underground water and sewage pipes. Based in Boisbriand and co-owed by Zambito, his father and Peter Laschuk, the company decided in about 2002 to break into the Montreal market, bidding on a small, half-million dollar contract in east-end near the Olympic Stadium. Zambito said he bid very low to get his foot in the door, just breaking even.

While on the job site, a city of Montreal inspector named Luc Leclair whose job it was to oversee construction sites informed Zambito that he had been sent over “to make his life difficult,” Zambito testified.

“People are unhappy that you are here in Montreal, ” Zambito was told — those people included the Mafia. “I faced up to the music when it was time to face the music,” Zambito said.

Zambito became part of the cartel that included construction firms Construction F. Catania et associés, Construction Catcan, Construction Garnier, Construction ATA, Construction Mirabeau, Construction Super and Construction TGA, he said. Each member would get a turn to bid on public contracts — Zambito dealt almost exclusively with public contracts for municipalities or the Ministère de transport de Québec.

Larger firms able to handle larger contracts like Catania and Garnier would get about 18 per cent each of all the public contracts doled out by Montreal; Infrabec and Catania 16 per cent each, and the remaining work was shared among the others.

Whoever’s turn it was to win the contract would call the other companies to say how much he was bidding, so the others would know to bid higher, guaranteeing the work. Zambito did not say, but corruption experts have estimated collusion allowed contractors to put the costs of contracts at 30-per-cent higher than their expected price by controlling the bidding process.

Companies not in the loop would have to bid low to get the jobs, ensuring they could not survive in the market. The practice extended beyond the city, he noted.

“Montreal is a closed market,” Zambito said. “I submitted bids in Laval, and that was a closed market, too. The North Shore of Montreal — closed market, too.”

Surcharges and payments

Each company would have to pay the Mafia 2.5 per cent of the total value of a contract, minus taxes and the 10 per cent surcharge added to contracts to cover unforeseen expenses. So on a contract worth $2.5 million, the payment expected was $62,500. The money would be delivered in packages of cash throughout the contract. Often, Zambito would give it to Nicola Milioto, a construction firm owner identified as a middleman who was seen more than 200 times at the Consenza Café, and recorded handing over cash to mob leaders.

To get the cash, construction firms would submit false bills to legitimate companies on the take. For instance, Zambito said he would send a cheque to the Gilles Transport trucking firm in Laval, paying them $50,000 for the use of 50 trucks used on a certain day. Except Zambito only used 30 trucks, so the company would take a cut for itself, and hand the extra cash back to the construction firm, which would use it to pay the Mafia.

There were no threats, Zambito said. These were “just the rules of the game.” He avoided the Consenza Café because it was well-known in the media, but he knew the leaders of the Rizzuto clan well, as did many in the Italian community that had its roots in the same area of Sicily. Weddings had 600-800 people, and the community was large and members saw each other often. The Mafia heads were known and liked for brokering peace, even with families, and maintaining order.

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